Venture Step

Dalton Anderson (00:00.78)
Welcome to Venture Step Podcast, where we discuss entrepreneurship, industry trends, and the occasional book review.

From nailing your product market fit to building a killer team and even mastering the art of board meetings, we're diving into these strategies discussed in a book called The High Growth Startup Scaling Startups from 10 to 10,000 People by Aled Gill. This is a book that is referenced and revered by founders. Definitely something that comes up quite often.

on internet forums or just following founders on social media, they'll reference this book and how influential it is. And basically the book is a handbook on how to scale your company, the things to look out for, the things to look for, and the things to avoid. And it's all condensed in a dense but concise format of 343 pages.

To put that in perspective, the Thinking in Bets book is, let's see how big this book is. The Thinking in Bets is 270. Thinking in Bets for me was a quick read, it was very easy. The high growth startup wasn't a difficult book, but the information was sometimes dense and.

overall very important for me to remember. And I wanted to take the time to reflect on what was said in the interviews or what I've read. I took down detailed notes on every chapter. I took notes every couple of pages. And basically because this book is not the blueprint, but definitely a framework of which you could use to scale a company or

Dalton Anderson (02:02.592)
In my case, I'm working at a startup like situation where I'm starting a insurance program. And so we're scaling from zero up to X revenue. And a lot of the things that they discuss in this book is relevant to my professional life. And these things that are discussed, I have to reflect on

my work experience while I've been at MSI and think about the situations that are similar or something that may not be an issue at the moment, but what's coming up and what was discussed in the book and how can I prevent issues that potentially might arise in my own life? So in short, I found this book fascinating, influential and

I would say must read. And if you don't want to be a founder or if you don't want to be an executive and you think that you are okay with your hobbies or you want to pursue something else or you have different interests in life, I would still say this is a great book to read simply with the same perspective of

48 laws of power that I talked about in the episode, many episodes ago, the 48 laws of power book review. If you don't want to manipulate people or take advantage of them, it's not that information has morality. Information on itself is neutral and it's how you apply that information. So if you don't want to be a, a bad person, a good, and you don't want to be taken advantage of a good way to do that is

what weapons would someone like that use against you? So you read the 48 laws of power and you can build defensibility. This is the high growth startup. So instead of building defensibility, you would build perspective on what is my manager looking for? What are the leaders looking for? And if you could do that, you could make yourself very viable to the company and would make their lives easier, which would make your life easier.

Dalton Anderson (04:21.036)
long-term at least, you might have some bumps in the road for sure, depending on whether your manager or your direct supervisor accepts everything that you may bring up or recognize and proactively act on. But that's a different discussion. But just in general, this book gives you a wonderful perspective on problems, processes, scaling talent, how to hire, how to interview,

everything. It's all broken out. And if you don't want to read all the interviews that give you additional insight on problems that these founders had, then you could just read the small snippets of, how do I hire an executive? How should I go about fundraising? What are the things to look out for when I'm adding a board member? All of these things are broken out, maybe three or so pages about each topic. Very, very good book.

phenomenal. I love it. It is right now. It is my favorite book that I've read, especially for last year.

It's not even close. That being said, I'm Dalton Anderson. I'm your host. This is the Venture Step podcast. We discuss a numerous of topics. One thing that I talked about in a couple episodes ago was I wanted to get more guests on the show and my commitment was 12 guests. And I'm pleased to announce that I have one guest episode already recorded and I have a scheduled recording next week or this week.

Cause it is Monday this week on Friday for an additional episode. And my idea is to curate a nice bit of content related to the California wildfires and insurance and some AI wildfire action. I don't want to spoil the show or say, or the episodes. So I'll leave it at that where I'm working on something. It's going to be cool. I'm excited about it. I hope you're excited to listen in. That'll be coming out.

Dalton Anderson (06:30.008)
in a couple of weeks if everything goes as planned. But sometimes things don't, but just wanted to let you know that I'm making progress on that commitment to you guys. Okay, so this episode is going to be breaking down some of the key topics that were discussed in the book. And if you find these things interesting, I suggest that you go and read the book. It's a wonderful book and I can't cover everything in the book as my episode would be.

very long, but I'm going to cover some of the cool topics or the topics that may or may not be related to an interview because the interviews are more heads down versus high level. And so I wanted to focus a little bit more high level. And if you wanted to get heads down, I suggest you buy the book. So some of the topics that we'll be talking about is building and managing your executive team, the CEO and the evolving role.

effective board management, product management, and funding your growth.

So the role of the CEO.

is many things and it's what you want it to be. As a co-founder or someone who is a CEO, you've got to choose what CEO are you. Are you more operational or are you product or you technical and or you or your finance and so your CEO might have a direct impact on what kind of executives you need versus

Dalton Anderson (08:12.226)
having a traditional standpoint, okay, I need a CEO, need a CEO, need a CFO. And those are for more established companies. Eventually you would probably need to do that, but when you're thinking about your role as a CEO, what do you want to do? So if I was a CEO, I would be more of a product centric CEO. So I'd work on the product. I'd work with engineering. I'd work with the design folks and that would want to

One, I'd want that to be my main focus because that's what I'm good at. I'm a product manager. And then the second thing is if I'm working on that, I don't want to spend 70 % of my time on HR, sales, other things. I want to know what's going on, but that doesn't need to be my direct responsibility. And I want to have some oversight, but I don't want it to be my direct responsibility. So I would hire like a chief operating officer.

to free my time up to work on product. A good example that they gave in the book was Mark Zuckerberg is a product CEO, product centric CEO. So he works with the engineering group, works with the product and he wants to build cool stuff, which is something I would love to do. I would love to build stuff and it's good to build stuff, but also maintain it and manage it. But mainly you want to focus on building and maintaining the product versus

building and maintaining the operational group. And if you don't want to do the operational piece, you've got to hire somebody to free your time up. And so that's basically what it talks about is the evolving role of the CEO and how that could shift. And then there are some dynamics with your co-founder, right? So if you had a co-founder and a good example and very common is you have a technical co-founder and then you have

a product or business co-founder that may have deep insight in the industry. And then the technical founder has some insight, but not as much. And you see that dynamic play out quite a bit. And the technical co-founder is phenomenal at coding. She's a wonderful coder and

Dalton Anderson (10:32.118)
isn't as interested in the product or the operations or marketing or sales just wants to code. And then the product CEO, could be not CEO, the product co-founder. She could be a wonderful product person, years of experience and knows the product in and out and could hook up distribution, design the product and knows exactly what their customer needs.

those two dynamics would shift over time. And one thing that you may run into is your co-founder and say this example, the technical co-founder doesn't necessarily scale with the company and isn't fit for a CTO role or chief technical officer. And so you'd have to negotiate either leave or repositioning of the co-founder.

which is always messy. Well, you can't predict these things. Being a startup is hard enough, like nine out of 10 startups fail. So you can't necessarily say, okay, like this is the co-founder that I think would scale to be CTO or whatever the case may be. At the end of the day, you're just trying to build stuff and survive. So anyways, the CTO say in this example, can't scale as the company grows.

because you got to think about it like you start out maybe with five people, then within three months you add another 50, three months you add another 50. And then before you know it, you're at like 800. And once you get to that point, you're like a real company and not everyone is going to scale with the company. And you'll have some people that are there and don't like the dynamic.

that is changing. And I'll talk about that a little bit later, but this is related to the co-founder. And so the co-founder might not necessarily scale with the company and they need to either reevaluate where they're at and where they want to be. Maybe get a coach or something like that to enable them to scale with the company. Or if what they want isn't what the company could provide and you can't come to an agreement.

Dalton Anderson (12:56.462)
then you have to negotiate the leave of the co-founder, which is always messy. But in general, you'd want to have every 12 to 18 months, you want to have a discussion with your co-founder, like, what do you want your position to be? What do you want your role? What do you want your future to be at the company? And you guys do that together and you have an agreement on what you see and what you want and where you're at. And

at a certain point, if those things can't align and you can't come to an agreement, then you have to split and it's going to be messy. The next thing is time management. And this is something that I've incorporated in my own life where I have ruthlessly audit my calendar at work and audit my personal life, especially my work because

I work in many departments and been a crucial person from design of the database architecture to technology improvements to product improvements, actuarial analytics, everything, which is the core role of product. But there's been some times where I've been like very deep in these areas because I'm a technical product manager.

I would say I'm technical plus a little bit of growth. I'm trying to get more growth, but that's a different story. But I was being put into a lot of meetings and the issue was, did I need to be in all those meetings? Do these meetings need to be meetings? And so I got to the point where I was auditing my calendar weekly and then I actually went to daily and where I was just auditing all my stuff. Everything was being audited. So I was auditing my

my meetings. And if I didn't feel as if this had to be a meeting, I would just tell them like, Hey, like, I don't think this is a meeting. Can we address this via email? If you feel differently, let me know. I'm really busy. I know it's important, but let's try to settle this via email and then get on a call. We all have the information and perspective, or if the meeting doesn't have an agenda, I always request an agenda.

Dalton Anderson (15:21.548)
I don't send out any meetings without an agenda. And it could be a very simple agenda, but at least you know what you're joining. if there's no agenda, in my mind, there's no meeting.

So audit your calendar at work, very important. Make sure that people aren't wasting your time, because that's one resource that you can't get more of, least at the moment. It'd be cool to go back in time. And be okay with saying no. And I had to do this all the time, because everyone wanted something, and everyone's stuff is important. It's important to them, but is it important to the company? Is it important to the product improvement?

And a lot of times the answer is no and explain your no, but let them know that I'm not working on this because X, Y, Z. And if they don't agree with you, then I guess they could escalate it,

I would try to...

illustrate why their asses make sense, at the moment at least.

Dalton Anderson (16:33.378)
Decision frameworks. So you want to have a framework that you create for one, the principles and culture of the company. And this could be for your team as well. You want to have a decision-making framework and principles that you want your team to abide by. And so what, what does that, what does that mean? What things do you need leadership approval for? So in this case, my, my boss, Aaron,

we have an agreement for X things. We run it by each other first or more like I run it by him. And if it's in these areas, I've got full super, I've got full authority to do what I think is best for the group. And that works for us because, Hey, this is when we should slow down. We should huddle up. We should make it an agreement on what we should do. And so this would be a centralized group.

decision. And these are these decent, these are the cases where we want to have a decentralized decision, do what you think is best and move on. And if you can have that flow down, not only to a manager or middle, middle, middle level and manager or senior leader, but also to still that down to just employees at the company, then it opens things up.

for everyone, it frees up everyone's time. And when you're working with a small team, say you're working on a team of eight people or your company's eight people, it frees quite a bit of time of the managers. Touched on it a little bit was the co-founder dynamics, having those discussions every 12 to 18 months, managing the transition of the company or the co-founder's roles.

And a good example that they gave in the book was Steve Wozniak, Steve Wozniak and Steve Jobs both worked at Apple co-founders. Steve Wozniak had a less prominent role in the direction of the product and the things that were done at Apple. And then Steve Jobs took prominence of the CEO role in the direction of the company while Steve Wozniak was okay with being what would be

Dalton Anderson (18:56.758)
identified as a individual contributor. so Steve Wozniak is a phenomenal individual contributor in the technical expertise of coding and designing.

Dalton Anderson (19:15.318)
And Steve was okay with being an individual contributor. But if Steve Wozniak was like, Hey, I want to be the CEO, Steve Jobs and the board and the VCs felt that Steve would be the better fit. And we're like, Hey, like we appreciate that you've got that drive, that ambition, that push right now. We feel that jobs is the better fit here.

We don't see you in the foreseeable future being the CEO at the company. And if Steve couldn't make amends to that, then they would have to have that difficult conversation. And.

put together some kind of package for Steve to leave. But luckily Steve stayed. So next thing is building your team. So there's a couple things that you need to understand with this startup like environment. And maybe we could also take that to a team that's growing fast at a company like an incubator, which is something I work at right now. Scaling your workforce, think about

the 12 to 18 months and the confusion is trying to hire an executive forever or someone on your team forever. Just think about the next 12 to 18 months because when you're working on these incubator teams or a startup or you're the founder, you don't know what, you don't even know what six months looks like. Like in six months,

The stuff that I'm working on substantially changes. It's not even close to what I did six months ago. And I have no idea what I'm going to be working on within the next six months because we have all these different initiatives that are being executed that would substantially change how the day to day looks for everyone on the team. So I don't know what 12 months out looks like, but I could have a good idea of where we want to go and how to execute.

Dalton Anderson (21:29.426)
and what people we would need to do these, what people we would need to complete these objectives is what I meant to say. And so identifying this talent that potentially is scalable, like you'd want it to scale, right? But at the same time, don't try to hire for someone five years out, hire for what you need now. And

what they would be able to do 12 to 18 months from now. And if you do that, you should be all right. And just depending on the position, right? And they talked about this in the book and it's very important to understand that there are certain positions that you can hire with a limited experience and they could perform very well because you know what they're working on and you know the impact at the company. Positions that have a lag time of

input to output, say product manager, developer, or

accounting potentially like an accountant. You don't necessarily know the impact of what they did right away. You can find out years later with accounting or years later with a product manager or years later with a developer. And if you hire a substantial amount or just a little bit of of of junior developers or junior product managers without the proper

oversight and

Dalton Anderson (23:10.776)
foundation for these people to be nourished and

mentored, it's going to be a big disaster. And a good example is a junior developer doesn't necessarily see how their code affects all the other code or how this code would limit some of the features that you'd build in the future. And if the code is spaghetti code,

years down the line when you wanna do a feature or you wanna change something, all the code is like linked to other code and all the methods are all linked together and properly, nothing is separated. Naming conventions of the methods are not up to par and the code is very confusing and can slow down your dev capacity 50 plus percent, no problem.

would kill your startup. Like a startup needs to ship, needs to ship stuff. And if it's not shipping, then it eventually will die. Like you need to have product innovation, market position, product market fit, all these things need to combine into one thing. And you still have a high likelihood of failing, but it gives you a better chance. But if you have spaghetti code, it's not going to work. So in the areas of which you have a delayed

results of what the input was, be very wary of hiring anyone of a junior level and hire senior, senior employees in those areas. But a type of position that would work well is design. Like if you had a UX designer, UX UI designer, and they had zero experience, someone out of high school or undergrad,

Dalton Anderson (25:11.672)
that had a cool portfolio that you liked, it's part of you know, aligns with your brand's vision and voice. You can hire them, no problem. And if their stuff sucks, then you would know right away. You would know instantly when they send you an email and say, here's my new design, or like, hey, here's the SharePoint or Google Drive link to our designs that you asked for. You know right away that this is not it. And you can move on.

Well, with his other stuff, it gets dangerous.

Dalton Anderson (25:46.856)
Onboarding and retention. And this is important. So depending on the employee, you want to have a welcome package. You want to have a welcome email. You want to send over what your vision is, your brand, your voice, what the direction of the company needs to be. What are their objectives? Make sure that they're settled in. And if you're hiring a manager, you want to make sure that you communicate the new process and you don't want

a manager or an executive. You don't want your team to not understand what the new expectations are as far as communication of problems or suggestions. And then the last thing that you need to do is you need to manage the old timers and it's old timer syndrome. And so as your company scales, as I mentioned before, sometimes your employees or founders don't scale with the company.

But if you had an employee that has been around for three years and the company is substantially different than what it was during their time together, when you all were coding or launching the product on a plastic standup foldable table in some garage versus now when you have directors and managers and all sorts of stuff and they don't one,

appreciate the different communication paths that need to be abided by. They may not appreciate their lack of power and position at the company or may think that they're entitled to power at the company because they've been around for so long. They may not scale with the company and they couldn't scale to a applications manager or as a staff developer or whatever the case may be.

they just don't work with what they've got. And those things you have to communicate and you have to ask them, Hey, like what, what are your issues here? Like, how are you feeling? What do you want? And if what they want isn't what they can do, then you have to let them know like, I don't, I don't see what you're seeing here. And if we can make strides to do what you want,

Dalton Anderson (28:12.952)
then let's try, but we give a shot. And if they can't make progress towards what they're looking for, then they just, they've got to go because they aren't happy. They are dragging the team down and overall just not a good look. So you've got to manage the employees, but then you have some old employees that scale with the company and that want to

Excel and learn and they're able to adapt to the new surroundings that they're in. And that's excellent, but that's not always the case. And I think that you'd have.

some kind of a split, but I'm sure that more employees think that they can scale, but they probably don't. Building an executive team. So an executive team would have a couple of traits that you're looking for. Like you want a team player, you want someone who's driven, you need someone with great communication skills, you need someone who can execute, who is suggested to you by

your VC executive recruiting team or your own executive third party HR recruiting group. And you also want to make sure that you get it right. There's nothing worse than hiring a bad executive. And from what the book says, I have no experience with hiring the wrong executive. I've worked through some painful

executive experiences through my professional career, but I have not hired my own executive yet. But anyways, so that there's just these these traits they need to look for. And then the last thing is, like, don't rush it like it's it's important to one think about the 12 to 18 months don't hire someone for five years because the person that you want that would scale to the company within five years doesn't want to work for your company. And in

Dalton Anderson (30:21.774)
If they did, they'd probably have their own. And so that's the first thing. The second thing is, you know, make sure that you have referrals and that you're, you reach out to every referral and you get lunch with them and you think that they, they align with your vision. I mean, it really depends on the thing that you're hiring for and it's very situational. And so a lot of these things, just depends. But if you are example would be

If you need to free up a little bit more of your time to think strategically and less in the day to day product, you want to hire a product manager, senior, not a senior product manager or just a product manager or a chief product officer. You would want to really understand their background, what they've worked on, what type of product manager are they, their referrals, the things that they're interested in. And then you want to know what their vision is of the product without you telling them.

they've got to tell you because if you tell them what you want, then they could just tell you what you want versus them outlining the brand and the product and the direction that they would want to take. And if that aligns with you somewhat, I it doesn't need to align a hundred percent, but if it aligns, then that's probably a good hire, but you don't want to hire someone where you are complete disagreement with them. And he,

wants to take a completely different direction that you want to take. And you're always butting heads because then that just sounds like a bad situation. He doesn't want to be there. You don't want to have to argue with someone consistently about the product direction because you're the co-founder. And so that, whole situation just doesn't mix very well. And that leads into just managing and hiring executives. One thing that you have to make clear, and I talked about it a little bit,

earlier briefly when you're hiring a manager on the team is some of the things that may be detrimental and lead to the firing of an executive. The first thing is them being tentative or too passive. And that might be because they

Dalton Anderson (32:36.696)
don't wanna rock the boat. But another issue with that is if they don't wanna rock the boat and they feel like they're potentially rocking the boat, one, you haven't made them feel like they are in power to do what they need to do for their job, and two, they're not communicating that. And if you're hiring an executive, I would expect that they would be able to communicate problems and say like, hey, Dolan, I don't feel like I can do my job because I...

don't want to step on your toes. And if they can't communicate that like a two sentence statement, then are they really executive material? Like they've got to communicate it. And if, and if you're not opening the dam and letting things flow through to them, then that's an issue in itself. So if they're too passive, another, another key issue would be if people are circumventing

your executive that you hired and taking problems straight to you. That could be two things. One, you haven't clearly communicated that this hire is handling these things from now on and problems and suggestions need to go to this person. Or a more severe thing is if people don't think that this hire is capable of solving these problems or if they have

been provided the information and just aren't taking action and they're escalating the issue to you consistently, that's a bad sign.

Dalton Anderson (34:13.184)
And then the last thing is figuring out a decision structure and organizational structure for your org. And it talks interestingly about how to structure org and how you want to.

separate decisions and have tiebreakers. And so a good example would be engineering and product are always at, I know this from experience because I work in product, like engineering and product always have different ideas on timelines, execution, things to do, and they're always butting heads.

And if they have a disagreement, who's the tiebreaker between those two groups? Well, if you had the organizational structure set up as if the executive or an executive is head of both engineering and product, either like the chief technology officer or the chief product officer, depending on how the company is structured, that would be sufficient because if things got had to get escalated so high that

their managers or the managers of each of those departments couldn't have agreements, then you have someone where they would be able to make the decision on what to do. And you don't want to be in these situations where these key groups can't make decisions and both of them have equal power on the decisions. And so there's no difference in weight and then things can't get done and things grind to a halt. So you don't want that.

The next thing that I think is one of the most important topics that is discussed in the book is mastering the boardroom. One, I have zero experience in the boardroom mastery. So my mastery is nil, but the book does a great job breaking down the different dynamics and how to protect yourself when you are fundraising.

Dalton Anderson (36:22.198)
And let me just level set that there's a couple different type of seats. There's an independent seat and then there's common seats. When you accept money from a VC or angel investor or whatever it may be a sovereign wealth fund, hedge fund, private equity. But for the most part, you're going to be accepting money from an angel investor or a VC in your beginning seed rounds. And then these other

investment groups would come in later when you've established your stable evaluation, your growth, and you've got actual financials that they could look through. But if you're just starting out with an idea, pre-product or pre-revenue, then I don't think for the most part a family office is going to fund you. And that's what it says in the book. But anyways, so the dynamic is you're mostly dealing with VCs and angel investors. And so

When you raise money out of VC, you have this valuation, they take equity and they give you money. But that money comes with stipulations. And especially during your first couple of rounds, they want oversight. Sorry, I to burp. I burped already. But they want oversight on what the company is doing because it's brand new. They can offer great advice and strategy and

different nuances related to issues and well, we've got X, Y, Z, we know how to connect you or just advice on how to run the company. Because you're not, you've never done this before, probably. And if you are a seasoned founder, then it's a little less stressful, you know what to do. But if you're.

you're fresh and this is your first time, then they can provide a little bit of guidance and have a vast network depending on your VC and who you fund with. choosing the right partner is important. And the book talks about how if you think that ex VC partner is better than another, don't be so caught up in the valuation and the deal. Make sure that

Dalton Anderson (38:48.84)
If it came down to it and everything was equal, pick the person that you trust the most and that you think that you'd have the best relationship with.

And there's a couple of things that you could do to evaluate that. So one would be their personality, their insightful questions or answers. What kind of advice they provide, how interested they are in your success or the company's success. And then what kind of companies have they funded before and what kind of network that they provide and who would be on the seat when they join. Because just because you like a VC partner, it doesn't mean that they'll be

in your boardroom when you have these meetings, it could be someone else. And they talked about how if you're performing very well, they'll potentially switch out your VC partner with someone who is new and then they will need to be trained by your other board members and yourself on like what to do, how to do it. They're, they're wet behind the ears. And then there's another scenario where you're not performing well.

and they'll pull their VC partner to free their time up and they'll give you a newbie so they could work on more important companies. And so those are two scenarios, one of which is more favorable than the other, but yes, you're not guaranteed the VC partner. there, there's a stipulation in the contract that they could switch out that whoever's on the board seat whenever they want. But in general, you would want to look at those attributes to figure out which

VC firm you want to go with.

Dalton Anderson (40:34.09)
And I'm pretty sure I said this, but let me just repeat. You'd want to whatever you feel most comfortable with, and you would even, you should even be comfortable taking a lower valuation to establish a relationship with a VC that has a great network, awesome advice, and has a strategic relationship that you can help manage and grow and nurture.

don't just take the best deal. Because the best deal.

isn't necessarily the best deal when you look in between the cracks.

Okay, so the next thing is talking about the board and how you want to have that structured.

So you want to be very careful about adding too many people to the board. A lot of companies that you fund with, they're going to request a board seat. And in the beginning, that's okay. But later on, you don't want to have 20 people on the board because it's, it's not useful. It's not effective. It doesn't make sense. So you want to keep your board very small and you want it to be odd numbers. So you can make decisions. So that being said,

Dalton Anderson (41:55.502)
How do you do this efficiently? Well, you want to one, have a process where if people are flying in the night before the meeting, then you want to have a board dinner. This is if you have multiple members, by the way. If you just have like a couple, then don't worry about it. If you are having multiple members and you're making a big decision or you want

to allow them to vent before the board meeting. You want to have one-on-ones with them for 30 to 60 minutes. And then if you are thinking about

Dalton Anderson (42:39.374)
I lost my train of thought there, unfortunately. I thought about me, my eyes diverted from the camera and I was like, oh man, I did that. Didn't mean to. And then I lost my train of thought. So the first thing I said was board meetings with the dinners and then one-on-ones for venting. And the last thing is related to sending out the slide deck and materials 48 to 72 hours.

beforehand. It's giving people proper amount of time to review the content and have insightful.

Dalton Anderson (43:20.706)
Discussion, have an insightful discussion regarding the content that you said during the deck.

And then when you run your meeting, what you really want to focus on is the strategy, company strategy, but you have some stuff that you have to sign off on at the board. you have board business, things that you need to sign off or need to be approved. And then you have things that you need to follow up on. What was the previous meeting about and what do you need to execute on?

now and then just like critical problems that need to be discussed and the last thing is like product strategy and direction. When I say product maybe company is better company product interchangeable when you're that small because you only have one product but

What do you need to do to increase the value of the company and have a better market fit for their customers or what's the new features that they should probably add? What are some problems coming up? How do we solve it? How we solved it before? And hopefully have an experienced board that is knowledgeable of the area of expertise that you're working in and is able to provide critical insight that you may not have gotten.

if you just accepted the best deal.

Dalton Anderson (44:51.426)
The next thing is VC cronyism and a VC crony is someone who owes the VC firm or is a

person who is either funded by the VC firm or it works on several boards of the VC or

Dalton Anderson (45:17.866)
is someone who's in position to get hired at the VC firm as something something. And so they basically have a lot of leverage on this person. And if they

It's not like if a prick will quo or if they don't do that, they're gonna hurt their family or something like that. they have a definite conflict. Conflict of interests and. Basically, the VC group is trying to turn your independent board seat into a VC seat, which. Isn't in your interest, it's in theirs and will definitely.

mess up your board when you have to make crucial decisions because you want your independent board member to be insightful, influence the room, and hopefully be someone that is neutral. You don't want them to be your best buddy. You don't want to hire your mom. You don't want to hire your stepmom. You don't want to hire anyone from your family.

and you want them to be knowledgeable in your area and hopefully a entrepreneur and someone that you'd want to hire at your company but is out of reach because they're just four or five levels above what your company is right now.

and this independent board member, you're going to get a lot of pressure from the VC firms to hire their guy. You know, so what do you do to combat that? And what they did was they broke down this kind of term sheet for hiring independent board member. And it breaks down, okay, here's the requirements. Here's the experience. Here is their background that they need to have.

Dalton Anderson (47:11.21)
These are the industries that they need to be worked in and a whole spec sheet of what is acceptable and then have your VCs agree upon it. And once they agree upon it, then if they suggest someone that isn't part of the specs that were laid out and agreed upon, you can call them out and be like, hey, like this is not what we agreed on. These are the these are the specs.

anyone who suggested needs to meet the specs. Otherwise it's not relevant. And so it allows you to defend your independent board seat. And then the next thing that's important is they're not going to want you to hire someone that potentially isn't their guy. And I'm talking, this isn't like every scenario, but I'm talking about

something that if you mess it up, it would have massive impacts at the company. And they focus on making sure that you hired the right independent board member for a long time in the book. So this is why I have this perspective and why it's a little more sinister than it is.

positive for sure.

Dalton Anderson (48:32.621)
just wanted to let you know that because it felt like I was being very negative and like everyone's out for you. But there's a lot of money at stake and people's morals at these points sometimes waver.

But regardless, independent board seat, the VCs aren't gonna want you to hire someone who isn't their person. So if you don't have a spec sheet, they're gonna complain and say, and find every little issue that they can about the person to push them further down the list or remove them or not hire them. So if you have this agreed upon spec sheet and you find this person,

Dalton Anderson (49:17.122)
They can't say anything. Say this is the spec sheet that we agreed upon. This person meets all the guidelines. What's your deal? What really are you complaining about here? What are your issues with this candidate? Because on paper, this person meets the specs that we agreed upon. And so if you're seeing something that I am not, please illustrate what it is.

And when you call someone out in that manner,

In that way, it's like, okay, you're full of shit. What's really your deal? And they can't say, well, really, I want to hire my, my VC crony and I want to take over your board seat that's supposed to be independent. So they'd be like, well, like whatever, whatever. like, yeah, I disregard that. It's probably whatever they say after that is probably not important because they're, they're just thinking of trying to legal out of it.

And some people are really good at that, like wiggling out of all these scenarios. And you gotta be wary of those people and probably experienced VCs. yeah, there's a whole chapter about that. Experienced VCs and these people are very good at telling you things that you wanna hear. They're good at selling something, selling their relationships, selling this. And then once the sheets are signed, it's a different story. And so you have to be careful with what

you hear, you've got to listen to what they say and what they do and their facial expressions and their posture and how they make eye contact with you. All of those things can influence whether or not you think that they're being for real.

Dalton Anderson (51:08.654)
Yes. So avoid the cronies, have a legitimate independent board and run your board meeting in an efficient manner. Send out the slide decks 48 to 72 hours beforehand. And hopefully your board can influence in a positive manner the decisions that you need to be making.

Product. Product is super important. Duh, I work in product. So product is one of the most important positions, especially at a startup or at your company. And so you wanna have very good product talent and then you wanna be very careful what product managers you hire. There's a couple different product managers. There's business, design, technical.

and growth. Sorry, I was blanking on the last one. so with business, businesses focus strongly with external partners and understanding and incorporating their feedback into the product. They work best with enterprise sales. Technical product managers can work in a various areas and are good at many companies, mostly related to like technology or financial companies where the information is technical in nature.

and not necessarily front facing. And so they don't have to work directly with the customer, like a business product manager would. They would work more on the back house of things. And then they would have the skills to be analytical, but driven at the same time to drive results. And then a design product manager is someone who is influencing the product design piece and

someone who is a good designer, but also a product manager. This is a great area in the book. They talk about how this could turn out poorly because the design product manager doesn't have the same skills of a business product manager or a growth or technical product manager. They may not know how to prioritize, communicate those important

Dalton Anderson (53:25.076)
and I would say essential skills to be an effective PM. And if they can't execute on those things, it's going to hurt the company substantially. And then a growth product manager is someone who can identify the levers in the company and then know which levers to pull to get things done. And so I would identify myself as a technical and growth.

Product manager and some of the characteristics that the growth product manager have. I don't have all of them, but I have majority of them. And then I have the technical skills and that's where I'm at right now. But hopefully I can get a merge between technical and growth and then maybe a little bit business. But I also like design too. You can't be good at everything, I would like to definitely have.

strong skills in all those areas and then really be the best in technical and growth. But there are some key characteristics that you need to look for with a product manager. So they need to know how to prioritize. They need to be top 10 % communication. They need to be able to get things done, execute, and they need to have, when you're hiring them, they need to have references to check every reference and

they need to be able to talk about and identify.

the product direction, like where they want to go and have this product sense on where the market is going to go and where they think the product needs to be positioned and who their core customer is. All of those things are important characteristics of a product manager.

Dalton Anderson (55:20.046)
And there is a couple of programs that you could put together when your startup or a company becomes more senior. And one of which is something like Google or Facebook's program with their rotational product managers or I think adjunct, not adjunct, assistant product managers is when you hire right out of undergrad and you do three, six month rotations at Facebook or you do

two 12 month rotations at Google. And you work on different areas at the company to understand what to do, what it is, all the birds and the, what the birds and the bees are. I think I'm messing up that saying, but the birds and the bees, yeah, baby, I don't know, whatever. So you learn everything about the company, hopefully enough to become some kind of a comp.

competent product manager, and then you graduate to a product manager, a junior product manager. And that's how they nurture talent. And it's the same thing with other companies. They'll do those leadership things and then you'll go to in their leadership program. And maybe you go a couple of months in Sweden, a couple of months in Germany, and then you do a couple of months in the U S and then you settle on where you want to live and what you want to do and where you, who you want to be.

Dalton Anderson (56:47.352)
First of all, that would be sick. I wish that was available when I was graduating during COVID, but didn't have those opportunities. So never got to apply or interact with that, unfortunately. But hey, we are where we are right now and I'm loving it. So financing and evaluation.

I'm going to keep this one pretty brief. I think people would understand, okay, VC hedge funds, family offices, sovereign wealth funds, angel investors. They invest at different parts of the company, not different parts, but different parts of the, the fundraising rounds. And so a hedge fund might come in later on a family office might come in.

a little bit later, but maybe mid to early sometimes depending on how sophisticated they are. But most of the time they are going to be a late, late investor. Each different investment group is going to be coming with drawbacks and their drawbacks will

will affect how you move forward in the future. And also they will have different expectations on what they want to look at, what they're interested in, like a hedge fund or VC. A hedge fund is going to be very revenue driven. What's the bottom line? What are your margins? What's your growth rate? What's your market share? VC would be, what's the product direction? How can we grow? How can you dominate those kinds of things? Like what's your

the strategic vision and less about the numbers as hedge fund is. I'm not saying VCs are just like, yeah, like just tell me your story and then I'll invest. Like they're gonna want some kind of financials, but nowhere near as extensive as the hedge funds. And then if things start going awry, VCs will be more comfortable with the situation and they'll be able to offer some more advice as I was talking about earlier with the board seats.

Dalton Anderson (59:00.568)
hedge funds might start to freak out because they're not as, and there's some hedge funds and talks about in the book. So some hedge funds are okay with the startup situation and our experience in that regard. But in general, they would be a little skittish when things start going bad, badly. And VCs would be calm and collective, calm and collected more so than a hedge fund.

And that's just an example. So you just got to look out for like what's important at the time. each investment from these people have drawbacks, benefits. And so like a benefit for a hedge fund, if you were trying to do enterprise sales, a hedge fund would have a fast network of people and they would know the CEO, they would know the CFO or whoever they're invested with. They would have hopefully strong ties.

and they could hook you up potentially. They wouldn't be able to get you the deal, but they could get your foot in the door and you'd have to make the sale. But getting your foot the door is like two thirds of the battle. And a hedge fund would potentially give you that extra oomph when trying to have those conversations with enterprise sales. And so that's something to keep in mind that each investment would have a different network and have different purposes.

And so aligning the network of investors that you want, like the investors network that you're obtaining through the fundraising rounds for the future of the company needs to be aligned with your vision.

Dalton Anderson (01:00:45.506)
The next piece is, I lost my train of thought again.

Dalton Anderson (01:00:55.378)
MMA. So mergers and acquisitions is a important part of a company when it starts to grow and is a way to get talent, technology, or just defending yourself. And so there are a couple different acquisitions. There's a team buy, product buy, strategic buys. A team buy is exactly what it sounds like.

you want to acquire talent and it's easier to buy a company than it is to let them all leave. And this is more popular when a company is seeing the end of the road and they've got some nice talent that you want to acquire or they've got a great director or some kind of star developer or the founder is notable in your space or something like that.

and the founder's tired or they are just their family's sick or some kind of life scenario. They want out their partners just tired of the grind or something like that. Like there's some kind of scenario where you might have leverage on either their emotional state or the financial performance at the company. And then you could convince them to be bought out. And the

buyout structure is laid out in the book, but like on a team buy, you would give the founder or the founders like a massive bonus, like signing bonus, like 40 % or something of whatever the acquisition was, like 20 % each for each founder. And then the key developers and direct product managers would get like 30%.

And then each developer would get like a 40 % raise, 20 % raise, and then you'd bring them on to your team.

Dalton Anderson (01:03:04.535)
That's a team buy. Product buy is a similar process where you're acquiring for the product, not necessarily the team, but the team and the product, if you're building a good product, you probably want their team because the product doesn't just make itself. And then there's strategic buys. I would think about it as a way to make yourself more defensible and build a moat.

And something that comes to mind is if you have a great product, but struggling to lock down distribution, buying something and acquiring a distribution channel makes a lot of sense where you are giving yourself a proprietary channel of which you can distribute your product versus going to the open market that in itself would be a strategic buy.

and

Dalton Anderson (01:04:00.994)
The last thing that I thought was great and it's on the last page of the book is the common things that say no to and the common things to say no to are.

Envelopes of money was the first example. Envelopes of money is an example from Google back in the day. There's some Google lore where they used to provide a bonus in cash to the employees and the police would shuttle from the headquarters back into San Fran. And apparently one night that the bonus went around, people found out that Google just

gives their employees thousands of dollars for Christmas and cash in this unmarked envelope. They were robbed of thousands of dollars. Like people just like there was some kind of mugging going on when people got off the bus and just people just got all their money taken. The second thing that is important is China. And so it talks about not very many tech companies have been successful in China and

They provided an example of Uber is the one that was somewhat successful and they have a 20 % stake in DD. I think that's how you pronounce it. It's like D I D I D D I E D I E D D I think they have a 20 % stake, but pretty much everyone else has been blocked and then cloned. So not trusting China and the fruits that you think will bear because they will rot.

is kind of the example. The next thing is the golden chrome panda. And so there is an example at a

Dalton Anderson (01:05:50.094)
Hold on, open up the book.

I was wondering what the company was, but they didn't list the company, but they talked about the Golden Chrome Panda. during a raising round, company raised a lot of money and then they bought a giant Chrome Panda to symbolize, like don't overspend, be frugal and spend your money right and all sorts of things. But then the...

Chrome Panda was a symbol of shame because they spend a lot of money to say not to spend a lot of money. And so don't spend money on a giant Chrome Panda. Find something else, another symbol that people could resonate with. In the example in the book, they talk about having like a juicer or something in your break room. And that could be your Chrome Panda. Pool tables. So the first startup that

Gil worked at was a company that scaled pretty quickly and then scaled down pretty quickly. So it scaled from 10 to a couple hundred within like four months of him working there. And then nine months later or throughout the nine months or nine months later, and then through four rounds of layoffs, three, three of which people were getting laid off. And then after the first layoff, they bought a

pool table to raise morale. And then during which people would play pool because the pool table's there. And then mysteriously during the next round of layoffs, those people would be on the list. And it became a symbol of, hey, if you have got time to play pool, you don't have time. That's a phrase wrong. If you've got time to play pool, then you've got enough time not to work here.

Dalton Anderson (01:07:48.886)
And just the general sense is if you've got time to play pool, you've got plenty of time at your job and or you're just not working hard enough. And so if you're seen playing pool at the pool table, you were laid off. And so that company scaled from a couple hundred back down to 10 and a pool table isn't necessarily good for morale. It's just something where people are playing and

It's not raised morale. It's just a sign of you're going to get laid off because you're not working. So the lesson is try to find a better way to raise morale at the company and keep things productive, I would say.

So we touched a lot of topics today. We're just over an hour here of this book review. So many topics were touched regarding MMA, boardrooms, product, building your team, managing talent, the journey of being a founder and your evolving role and your co-founder dynamics and all those things that come with scaling the company and how that affects your processes.

and your decision making and your org structure and all those.

other items that I didn't get to touch in this episode because it would have been too long. If you found this stuff interesting, then I highly recommend that you pick up this book. One, the inside of it is beautiful. I'm showing via video just how amazing the book is. I love the greens. The pop of greens for the headers. And then when you start a new chapter, there's just this pop of green.

Dalton Anderson (01:09:43.22)
and it's just beautiful. I love the book. But it took me a long time to read. And if you're reading it correctly, it should take you months. If you read this book in a month, you did not read it correctly. There's a difference between working and working smart. And there's a difference between reading and comprehending two different things. Don't confuse them. It's important not to. That being said, I am going to be reading

Can't Hurt Me by David Goggins. And funny enough, I got this with my mom and Sarah. And so we're all gonna be reading this book. Hopefully my mom reads it, but I know Sarah well. So we're gonna be reading this book together and I will do another review on another book. And so I hope to read this and then I will figure out what I'll read next. I don't know. But I really appreciate you listening to this episode.

Hopefully you made it this far and if you did, I appreciate you. And if not, then you won't even know what I'm talking about anyways. So if I get my episode scheduled with my guests, with the wildfire company, not yet to be disclosed yet, then we will be airing the two guest episodes. If I can't get that scheduled on Friday, then it will be delayed and then I'll talk.

about some stuff going on with AI or an overview of my quantum all-in trip. Once again, I really appreciate everyone that listens in and is supporting me in the comments and it just, yeah, means the world. So I hope that this was informative and not as, not very boring. It's very exciting stuff, so.

I hope that you're excited to listen into the next episode that's going to be airing next week and we're close to one year of episodes. Right. We're close to doing episodes every week for one year. That's what I meant to say. But I will let you go. And of course, wherever you are in this world, good morning, good evening, good afternoon. I hope you have a great day. Thanks for listening. Hope you tune in next week. Bye.